Well, something is happening at Davos. There has been more discussion of the Doha agenda, and suggestions by Peter Mendelson that the developing countries will need to make some non-agricultural market access concessions in order to allow him to sell further agricultural liberalizatoin to Europe.
But I have wondered whether any policy can really be made with the assemblage of the great and good (we can argue about the proportions). Perhaps the real role of Davos is in marketing. This seems to be what India is doing. Marcus Walker of the Wall St. Journal reports today that
The Indian argument [that its existing democracy promises stability] implies that investors flocking to China must bear in mind that China could undergo severe political disruption in coming years, which may cost them money. China has seen a rash of violent protests recently by residents fighting official plans for industrial development. China's critics say this highlights the scope for conflict in a system that lacks a safety valve for political opposition.
India is marketing its attractions as a place to invest on the basis of its long experience with democracy. The argument seems to assume that China will have to implement democracy sooner or later, and at that time we are likely to see costly disruption of the Chinese economy. So, invest in India, where democracy has been absorbed and won't cause disruption.
How will China respond? In the 1989 Tienanmen disaster, it was alleged that Deng Xiaoping stated "It is worth getting rid of 20,000 for 20 years of stability." So, I suppose we have three years before the rent on China's stability comes due. Investors will vote with their feet for democracy or non-democracy, but their decisions may actually be self-fulfilling. Greater investment may itself produce greater stability. So, India's marketing campaign seems to make some sense.
